Refer to FIG. 1 unless otherwise indicated. FIG. 1 illustrates the relationship between parties involved in a civil lawsuit.
One purpose of a civil lawsuit is for a first party to recover damages they have suffered due to the actions or negligence of a second party. The first party is referred to herein as the “plaintiff” 102. The second party is referred to herein as the “defendant” 104. A given civil case is tried before a given court 106 that has jurisdiction over the case. Exemplary courts in the United States include State Courts and Federal Courts. The decisions handed down by said courts are reviewable by their respective appeals courts.
Both the plaintiff and the defendant are normally represented by their own counsels. The counsel 122 for the plaintiff seeks to represent the interests 132 of the plaintiff. The counsel 124 for the defendant seeks to represent the interests 134 of the defendant.
Solid head arrows (e.g. items 132 and 134) in FIGS. 1 and 2 of the present invention represent the conveying of the interests of a first party to a second party. The size of the head of the arrow gives some indication of the relative influence of the first party on the actions of the second party.
The plaintiff seeks to recover damages 160 from the assets 110 of the defendant.
Double open head arrows (e.g. items 160 and 170) in FIGS. 1 and 2 of the present invention represent monetary amounts. Longer arrows represent larger money amounts.
The assets of the defendant may include limits of coverage 112 provided by at least one liability insurance policy, personal assets 114 of the defendant and joint assets 116 co-owned by at least one other partner 108 of the defendant.
Said at least one other partner, for example, might be the spouse, domestic partner or family member of the defendant. Said joint assets would then be the assets jointly owned by the defendant and their spouse, domestic partner or family member.
Said at least one partner might be one or more business partners of the defendant. Said assets might be the assets of said business partnership.
The damages 160 sought by the plaintiff can be divided into a first portion 162 and a second portion 164. The first portion are those damages that are covered by the limits of liability 112 of said at least one liability insurance policy covering the defendant. Said first portion is referred to herein as the “insured damages”. The second portion are those damages that are not covered by said at least one liability insurance policy. Said second portion is referred to herein as “uninsured damages”.
Insured damages might include compensatory damages incurred by the plaintiff. These might include medical bills incurred by the plaintiff due to injury caused by the defendant.
Uninsured damages might include punitive damages assessed on the defendant. These might include punitive damages assessed on the defendant because the defendant violated one or more of the civil rights of the plaintiff.
It is common during a civil lawsuit for both the defendant and the plaintiff to negotiate to settle the case. Negotiations are commonly carried out by the counsel for the defendant and the counsel for the plaintiff. During said negotiation, the counsel for the defendant might make a first offer for settlement 170. The counsel for the defendant might respond with a counteroffer 180. If either of these offers are acceptable to the other party, then a settlement has been reached and, pending approval of the court 106, the case is dismissed. If neither offer is acceptable, then the case proceeds. Additional offers and counteroffers may be made during the course of the case.
Settlement may be difficult to obtain when the amount of uninsured damages 164 sought by the plaintiff is large compared to the amount of insured damages 162 sought by the plaintiff. This is due to the fact that when the defendant is covered by at least one liability insurance policy, the counsel for the defendant often acts at least in part in the interests 133 of the liability insurance company 103 providing said at least one liability insurance policy. The liability insurance company is unlikely to allow the counsel for the defendant to settle the case for more than said liability insurance company's maximum exposure, which is the insured damages 162. The plaintiff, however, is unlikely to settle the case for an amount significantly less than the combined insured and uninsured damages, particularly if the plaintiffs case is strong.
Hence in cases where the uninsured damages are large compared to the insured damages, said cases often proceed to a judgment by the courts.
Once a court renders a judgment on damages, the liability insurance company is liable for the insured damages and the defendant is liable for the uninsured damages. The defendant and the liability insurance company each pay their respective liabilities to the plaintiff, assuming that the judgment is not appealed.
Uninsured damages will be paid by the defendant from the personal assets 114 of said defendant and, if necessary, the joint assets 116 co-owned with said at least one partner 108. Consequently said at least one partner will suffer due to the judgment against the defendant. We refer to said at least one partner as an “innocent partner” since said at least one partner was not legally responsible for the damages suffered by the plaintiff but still had to pay part of them from their share of the joint assets 116.
Hence there is a need for an improved means to protect the interests of innocent partners.